Austin has managed to lower the price of housing in full world crisis. One of your keys: build a lot

It doesn’t matter if it is the US, Europe or Asia. Where there is a tensioning real estate market, with upward prices and families forced to spend more than advisable In your rent or mortgages the question is always the same: how to lower prices or at least moderate them? Is there a formula that allows cutting the ascending spiral of €/m2? In Austin, Texas, they have succeeded. And to a large extent the key has been a clear commitment to the construction of new housing.

The full photo, yes, is much more complicated.

What do the figures say? That Austin, capital of Texas, the Tenth city With more US population, it has managed to reduce the cost of their home. It arrives with checking some sources to check. According to UNLOCKS MLS, in January the average sale price in Austin’s metropolitan area was 4.7% lower a year ago while the national trend at the close of 2024 was the opposite, with a price increase 6%. Redfin also confirms an interannual decrease 3.1%in the price of the square meter (m2).

News Week It has echoed some luxury residences of the city that have strongly reduced their prices. In August He spoke of an average drop of 7.23% in the prices of the new constructions, with some properties reduced to 31.33%. In January he cited a mansion that had reduced its price 50% And in February he cited a similar case with a decrease 30%.

Why is it important? In general, experts who analyze the Austin real estate market speak, if not drop in prices, yes at least of “stability”. What is not bad if two factors are taken into account. First, what The latest data From the Federal Financing Agency (FHFA) show the cost of the house has risen on average in the US, with a 4.5% rise between the fourth quarter of 2023 and the same period of 2023. The second key is that the last falls connect with those already registered in recent months.

Just a year ago Wall Street Journal (WSJ) He informed That, if compared to the maximum values ​​reached in 2022, prices had fallen in Austin more than 11%. No other US metropolitan area has seen the house more cheaper during those years. As for the rental cost, the newspaper pointed to a 7% drop in just one year, again a record fact on the US urban map. Today it is estimated that they are already lower 22% to those of August 2023.

Is there more data? Yes. Months later, at the beginning of autumn, Business Insider He put the thermometer again to the capital of the capital of Texas and found that housing prices had fallen even more clear with respect to 2022 peaks. At that time the Freddie Mac company placed the drop by 14% and Zillow in 18%.

It may sound like a catastrophe for the real estate market, but the truth is that, despite these falls, the prices of houses and apartments in Austin were maintained above the levels prior to the pandemic. A year ago Moody´s calculated that were still 35% higher than what would be expected by the local economy and the most recent analyzes of Redfin either NORADA They corroborate that today the M2 in the Texan capital is still more expensive than in 2019.

And what is the cause? Better talk about causes, in the plural. If Austin has managed to cut the price escalation of his real estate market and that the houses and apartments are cheaper is thanks to a sum of factors in which the commitment to new promotions is combined, the overconstructionthe increase in mortgage loans and the demographic dynamics of the city. To understand it, it is necessary to go back a few years ago, to A very different scenario in which prices grew at a good pace.

What period do we go? To the last decade and the years prior to the pandemic, when the promoters and buyers of Austin faced a very different panorama: an escalation of prices that, according to Some estimatesled to the average cost of an house in the metropolitan area increased by 63% in a decade, from 2010 to 2020. WSJ It goes further And it points to an increase of 60% in just a couple of years, just during the pandemic, far exceeding the increase in income.

These percentages are explained above all for one reason: the imbalance between supply (scarce) and demand (high). After the financial crisis of 2008, housing construction had been placed while the Austin area stood out at the national level for the growth of its population: 33% in a matter of a decade. Only between 2020 and 2022 his census office scored A 5.3% rise.

The reason for that boom? Among others and dynamics of the pandemic apart, the commitment of companies such as Oracle, Tesla or Elon Musk himself and Your interest For the Texan State. That there were large companies making the bags to move to Austin was no accident. Beyond its environment, it was attractive at the regulatory and tax level. The problem is that this growth further brushed the real estate market, making prices fire.

And how did the city answer? Building. A lot. Lot. And fast. Texas It usually presumes From its construction sector and in Austin it took muscle. Animated by demand, upward prices and changes at the regulatory level That they made the promoters easier, the Texan capital saw how its market entered into boil. It arrives with review some data to understand it.

Only between 2020 and 2022 plans for tens of thousands of new homes of all kinds. Business Insider Remember that if in 2022 more than 3,000 new properties each month came to the market, the following year the figure already exceeds 5,000.

It is estimated that Austin’s housing park gave a stretch of More than 8% In a few years, including both single -family houses and apartment and attached buildings. At the same time, thousands of floors were put for rent. Recently Audrey McGLinhy, from the local station KUT, said that in the Metropolitan Area of ​​Austin permits for new homes were issued at a devilish rhythm, which in some cases quadrupled that of cities such as Phoenix or Atlanta. All accompanied, of course, of A Milmillionaire investment.

And what happened? There is no joy that lasts a hundred years. And the Austin real estate market was no exception. One of the reasons why people bought were the good conditions to access credit, but that changed after Interest rates of the Federal Reserve in 2022. In autumn of 2023 the rate of an average mortgage loan was located at its highest level In two decades, which had a clear effect on prices: buy ceased to be interesting. The boiling was cut. And the market under marches.

A WSJ A year ago He counted How in Austin there were homes that were sold with losses, empty offices in the center or homemade willing to offer free rental weeks to capture tenants. In a word: “overabundance” of homes. The effect on prices was clear and the result is that news about mansions are still for sale today after be reduced by 30%. Unlock MLS calculates that in January there were around 9,600 properties in “Active Sale” in the Metropolitan Area of ​​Austin.

All thanks to construction? Not quite. That construction was sixth in its day to meet the demand for housing in Austin is a key factor, but there are other important ones to understand their current prices: the changes in the financing we mentioned before, a cooling in hiring and also alternations at the sociodemographic level.

After the years of growth, Austin found that between July 2022 and the same month of 2023 his shift balance was negative. More people from the main county came out than they moved to him, in some cases looking for more economical accommodations. Business Insider Precise that 20% of the new inhabitants of San Antonio were precisely former neighbors of Austin.

Is it a catastrophe? It is more complicated. It is true that some owners have had to sell homes Losing money either lowering half its prices, but there are some indicators that must also be taken into account: despite everything, the price of housing in Austin It is still superior to the one a few years ago, before the pandemic, and in January the average sale value in the metropolitan area exceeded $ 400,000rising to 550,000 in the city. In fact NORADA remember that Austin’s average cost is still slightly higher than the national average.

Some analysts, such as James Rodríguez, author of the study published on BI on Austin, They argue Even that the city is not found with an excess of empty homes such as the one during the 2008 crisis. Moreover, it argues that if the construction was completely stopped “it is very possible that prices resume their increase.” The big question that leaves the recent experience of the Texan capital is … Can other cities get lessons?

Images | MJ Tangonan (UNSPLASH), MEGAN BUCKNALL (UNSPLASH) and Florence Jones (UNSPLASH)

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